Billions at stake

January 13, 2014

GOWRIE - If the U.S. Environmental Protection Agency reduces or eliminates the Renewable Fuels Standard this year, the economic impact could be in the billions of dollars.

"That's billions, not millions," said Keith Dencklau, a Webster County supervisor, following a Wednesday meeting at POET's ethanol plant in Gowrie. "People don't realize this."

"I would like someone to tell me how reducing the RFS will help Webster County."

Article Photos

The POET ethanol plant, located just north of Gowrie, is shown in full operation Saturday.

Dencklau and Supervisor Mark Campbell were part of a gathering at the corn-based ethanol plant designed to outline for media the impact the RFS has had on Webster County and to encourage the public to file written comments with the EPA by Jan. 28 to keep the RFS intact.

At issue is the EPA's notice in November 2013 that it intends to cut the ethanol and biodiesel requirements for mixing into gasoline from 18.15 billion gallons to 15.21 billion gallons. EPA will close its time for public comment on Jan. 28 and then consider rewriting the law in the following weeks.

If that happens, it'll be the first time the 2007 law has been revised.

Written comments can be filed with EPA by going to growthenergy.org, or at iowacorn.org and follow the guidelines.

Dencklau said the economic impact will be felt heavily in Webster County that supports three ethanol plants - POET in Gowrie and Valero and Cargill in Fort Dodge - plus ethanol plants in neighboring counties. Tie those in with feed mills that buy local corn and there is a huge demand for corn.

"Every bushel of corn grown in Webster County never leaves the county," Dencklau said.

Campbell said the EPA's willingness to step backward on the RFS requirement sends a signal that the government no longer supports the production of biofuels.

"If this proposed rule were to take effect," Campbell said, "the entire county and surrounding counties would suffer."

He said farmers and agribusnesses would lose money and a potential of lost jobs would add to the economic challenges.

Vance Bauer, a Gowrie-area grain producer, said the presence of the three plants has increased the local basis for corn from -40 cents 10 years ago to +20 cents today.

"That's a 60-cent change in the basis," he said.

Basis is the difference between the Chicago cash price and the price paid directly to a farmer at a local elevator. Basis is traditionally below the Chicago price because farmers don't have to pay to transport the corn to market if it can be sold locally.

Due to the increased demand for local corn in north central Iowa, merchandisers compete for farmers' corn by raising the price well above the Chicago cash price.

"We're doing well because of the ethanol plants," Dencklau said. "The best (corn) market right now is here.

"If you take that away, what does it do to farmers?"

Merrill Leffler, another Webster County supervisor, noted that lost sales by farmers buying durable goods will also lead to lost local option sales taxes.

He said the influx of contractors and workers in 2013 to work at the Cargill plant and the CJ BioAmerica plant increased LOST funds by $150,000.

"If you take a kernel of corn to Cargill," Dencklau said, "they turn it into ethanol and sell the amino acids to CJ BioAmerica.

"CJ extracts the lysine for animal feed and the resulting co-product is ammonium, which is a green fertilizer that goes back on fields.

"It goes full circle."

Lowering demand

Gary Eischeid, general manager of Gowrie's POET plant, said there is still a chance to change the agency's mind.

"If we are to change these volumes and get them back to where they should be," Eischeid said in a written statement, "we must get substantive comments to the agency by the projected deadline. The Agency must hear from everyone associated with the biofuels industry - ethanol producers, farmers, vendors and anyone along the value chain."

Eischeid called the EPA's proposal flawed and said, "EPA is fundamentally changing how the RFS works by putting the burden of fuel distribution on biofuel producers rather than the oil refiners and integrated marketers who control 50 percent of the convenience stores in this country.

"A requirement of 14.4 billion gallons of ethanol can easily be met."

If these volumes are not increased, Eischeid said, it will simply perpetuate dangerous dependence on foreign oil and ensure that dirty fossil fuels continue to pollute the environment.

"With these cuts, our nation will not see the dramatic decrease in greenhouse gas emissions assumed under the RFS - with full implementation, the RFS would reduce greenhouse gas emission."

It's a jobs issue, too

Kelly Halsted, director of the Greater Fort Dodge Growth Alliance, said the county's three ethanol plants employ about 200 people and CJ BioAmerica "almost another 200. That's 400 jobs."

She said the number of local contractors and service providers used by the ethanol plants and CJ BioAmerica is extensive and those dollars are respent in the county.

The influx of new workers are spreading throughout Webster County and neighboring communities, stimulating those economies.

Eischeid told media that ethanol plants in the area have used 1,150 service providers to put and keep plants in operation during 2013.

Gadbury Plumbing, Heating and Sheet Metal Inc., of Fort Dodge, was working at the plant during Wednesday's meeting.

Gowrie Mayor Dave Stokesbary said the plant in his town employs area residents who, in turn, support local businesses.

"We're a farming state and the ethanol industry gives farmers income diversity."

Stokesbary said the EPA has a chance to give direction, through the RFS, to other segments of the economy, especially to auto and truck manufacturers.

"By requiring mixing biofuels with gasoline," he said, "it directs the auto industry to design engines to use it.

"We need renewable energy sources."

He said he is also concerned that scaling back the RFS requirements will hurt development of the cellulosic ethanol industry, which would be based primarily on corn stover in Iowa, giving farmers another revenue stream.